Understanding your company pension plan


Retirement can bring both great pleasure and stress. Making better choices is one of the easiest ways of ensuring a better retirement. Even if you are one of the lucky few who enjoys a company funded pension plan, you still have important choices to make.
The first requirement is knowing the type of pension plan you have (Defined Benefit or Defined Contribution) and what the differences are between the two.

If you have a Defined Benefit Pension Plan:

  1. Have you taken all opportunities to top up your plan? If such an opportunity exists, how big is it, where should the money come from and should you take advantage of it?
  2. Should you start to draw your pension immediately upon retirement, or defer your pension start date to a future year?
  3. What survivor benefit should you select? How does this choice impact your retirement?
  4. How secure is the funding of your pension plan? Will the pension income last, as long as you do?
  5. Should you consider commuting the value of your pension and take it as a lumpsum?
  6. Does your pension include a bridge benefit? How does the bridge work? What does this future reduction in monthly income mean for your retirement?

If you have a Defined Contribution Pension Plan:

  1. How much of your pension needs to be directed to a LIRA versus an RRSP? What are the implications of having your retirement savings inside a LIRA/LIF versus an RRSP/RRIF?
  2. How much of your LIRA can you unlock? How and why do you want to take advantage of this opportunity?
  3. How should your approach to investing change, as the flow of funds reverses from regular monthly deposits to the monthly withdrawals required to fund your retirement?
  4. When should you start to draw from these funds? How do you incorporate the other aspects of your retirement savings into your draw down plan?

Employers expect you to make these decisions on your own, without the benefit of experience or specific knowledge. At Retirement Navigator, we have navigated many pensions over time and know how to help you make the choices that best align with your long-term goals.

If you have questions about your pension we are here to help. Book a free preliminary appointment today.

Chase your passion,
not your pension

- Denis Waitley

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